Tesla shares down as Wall Street digests take-private plan

Elon Musk faces SEC probe over share-inflating Tesla 420 tweet

Elon Musk faces SEC probe over share-inflating Tesla 420 tweet

Board members at Tesla are evaluating CEO and Chairman Elon Musk's $72 billion proposal to take the electric auto and solar panel maker private. The board on Wednesday.

Tesla shares surged 11 percent Tuesday after a tweet from Musk's verified Twitter account that mentioned taking the company private at a $420 per share price.

Musk didn't expand on what he meant by the tweet on Twitter but he did send out an internal memo to employees to explain the rationale behind the tweet highlighting three main reasons behind his intentions.

Elon Musk has faced a barrage of criticism recently and his electric vehicle company Tesla has been taking a pounding from critics.

Former SEC chair Harvey Pitt told CNBC that while the United States stock market regulator permits executives of publicly listed companies to use social media to make statements about their businesses, Musk's tweet was still "highly unprecedented".

The board members said they were "taking the appropriate next steps" to evaluate the proposal.

There is no evidence this was Musk's intention with his remarks on Tuesday.

Just last week, he revealed he had been working 110 hours a week to deliver on short-term promises he had made to Wall Street, a load he traced to his boorish behaviour toward two analysts earlier this year. Musk's money-losing and cash-burning company is an unlikely candidate for debt investors to be willing to help go private.

By taking Tesla private, Musk believes that the company will be able to sharpen its long-term focus of revolutionising an automobile industry dominated by fuel-combustion vehicles without having to cater to investors' fixation on how the business is faring from one quarter to the next. That report had already partly lifted Tesla's stock.

Tesla is now valued at $63.8 billion. Bloomberg News, which first reported on that meeting, said the talks failed to progress due to disagreements over ownership.

Mr Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk.

Despite the board's statement, it was clear early Wednesday that the euphoria had worn off over Musk's bold claim that he had the funding secured to take the electric-car maker private. Tesla's other board members are Musk, his brother Kimbal Musk and venture capitalist Steve Jurvetson.

Investors have also questioned why the maneuver was not listed in a 69-page SEC filing, submitted last week and released Monday, that provided intricate detail of Tesla's financial outlook and coming events.

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